Competitive Power Producers Urge Maryland Regulators to Reject Power Plant Subsidies

Competitive power producers have weighed in at the Maryland Public Service Commission strongly urging against moving forward with a request for proposals (RFP) for new natural gas-fired generation facilities subsidized by fees assess the state’s electricity consumers.
 
The comments were submitted in advance of a January 31 public hearing the commission will convene to consider moving forward with this proposed anti-consumer power plant subsidization program. 
 
The Electric Power Supply Association (EPSA) and the PJM Power Providers Group (P3) told Maryland utility regulators that the state’s electricity consumers are benefiting from competition, and moving forward with the RFP will undermine the benefits of competition while imposing long-term costs on customers that should instead be borne by investors.
 
EPSA told Maryland regulators that “the State of Maryland derives significant benefits” from its participation in the competitive wholesale power market operated by PJM Interconnection, and expressed confidence “that a fact-based analysis will validate that the RFP is not needed and should not be pursued.”
 
The facts do not support a finding that Maryland has a reliability need at this time requiring up to 1,500 megawatts of new gas-fired generation under 20-year agreements as proposed in the RFP. EPSA urged the Commission “not to proceed further with the RFP process, and instead rely on competitive markets to provide the least-cost, long-term solutions – when necessary – for Maryland consumers, with improvements to regional market rules as necessary.”
                                                               
P3 told the commission that the evidence demonstrates that an RFP for the construction of new generation in Maryland is not necessary, not in the best interests of Maryland consumers and might be vulnerable to legal challenges (A similar consumer-subsidy program in New Jersey is currently mired in litigation). P3 said that the justifications for the RFP process begun two years ago have not materialized: projected shortages have not occurred; reserve margins remain robust; new resources, including new power plants similar to those contemplated by this RFP, are being built without consumer subsidies; and energy prices have declined and continue to decline.
 
“The wholesale market has proven capable of effectively responding to meet those needs and should not be undercut by regulatory efforts to skew market signals and lock Maryland consumers into bad deals that will require decades to pay off,” P3 said in its comments. “Moving forward, P3 continues to urge the Commission to refocus its efforts on working collaboratively to improve the wholesale market instead of erecting barriers that move Maryland consumers away from benefits that the market can deliver.”
 
COMPETE, which represents a broad spectrum of interests in support of competitive power markets, including electricity customers, competitive service providers and technology innovators enabled by competition, strongly supports the comments of the competitive power producers.  Maryland’s consumers and the state’s economy will be harmed if the commission elects to move forward with costly subsidies in support of of unnecessary power plants.

Joel Malina | January 20, 2012